The Nifty Bank index is set to include two new constituents—Yes Bank Ltd. and Union Bank of India Ltd.—starting from the end of December, in line with new weightage guidelines issued by the Securities and Exchange Board of India (SEBI).
According to Nuvama Alternative & Quantitative Research, the inclusion is expected to drive cumulative passive inflows of approximately $249 million into the two stocks. Yes Bank is projected to receive about $140 million, while Union Bank could see inflows of around $109 million. These inflows will be distributed across four tranches over the next four months.
Inflow Schedule and Weight Adjustments
The adjustments will occur on the following dates:
| Stock | Tranche 1 | Tranche 2 | Tranche 3 | Tranche 4 |
|---|---|---|---|---|
| Yes Bank | $91 million | $13 million | $17 million | $18 million |
| Union Bank | $71 million | $9 million | $15 million | $14 million |
The first rebalancing will take place on December 30, followed by adjustments on January 26, February 26, and March 26, 2026.
Post-inclusion, Yes Bank is expected to have a weight of 3.9% in the Nifty Bank index, and Union Bank will account for 2.6%.
SEBI’s New Weightage Rules
The changes follow SEBI’s directive to cap the weightage of top index constituents where futures contracts are traded. Under the new rules, the top three stocks in such indices will be capped at 19%, 14%, and 10%, respectively.
As a result, HDFC Bank and ICICI Bank—currently the two heaviest stocks in the Nifty Bank—will see their weights gradually reduced over the four tranches. HDFC Bank’s weight will decline from 27.5% to 18.9%, while State Bank of India’s weight will increase from 9.4% to 10%. Analysts estimate outflows of about $330 million each from HDFC Bank and ICICI Bank due to the rebalancing.
Market Reaction
On Tuesday, shares of Yes Bank and Union Bank rose up to 3% following the announcement. The Nifty Bank index itself was trading around 59,502.25, down over 170 points, but has gained significantly over the past month and year-to-date.